Management Accounting Report: Tech (UK) Limited, HND Business Module

This report examines management accounting practices within Tech (UK) Limited, addressing the need for improved financial information to aid departmental decision-making. The report begins by differentiating management accounting from financial accounting, highlighting their respective purposes and formats. It then explores various management accounting systems, including ABC costing and relevant costing analysis, and emphasizes the importance of effective information dissemination. The report delves into different types of accounting systems, such as cost accounting, inventory management, and job costing systems. Furthermore, the report discusses management reporting systems like schedule reports, exception reports, and performance reports. It covers costing methods used to calculate net profit, the advantages and disadvantages of budgeting, and the use of planning tools. The report analyzes financial problems, emphasizing the effective use of accounting systems to resolve them. Overall, the report provides a comprehensive overview of management accounting's role in enhancing financial performance and strategic decision-making within the organization.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Various types of management accounting system and their importance..............................1
P2: (1): Different types of management reporting system..........................................................4
M1: Benefits of using management accounting system..............................................................6
D1: Critical evaluation of accounting reporting systems............................................................6
TASK 2............................................................................................................................................6
P3: Various types of costing methods which are use for calculating net profit..........................6
M2: Effective use of management accounting tools and techniques........................................12
D2: Evaluation on the basis of data collected from business activities....................................12
TASK 3..........................................................................................................................................12
P4: Advantage and disadvantage of budget..............................................................................12
M3: use of various planning tools.............................................................................................14
D3: Critical analysis to overcome financial issues........................................................................14
TASK 4..........................................................................................................................................14
P5: Effective use of accounting systems to resolve financial issues.........................................14
M4: Analysis of financial problems..........................................................................................15
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Nowadays, it has been seen that plenty of organisations are looking for an effective
system that can assists them to record various accounting transaction in their respective format.
The primary aims and objective of an organisation is to attain their long and short term goals that
are being set by company for betterment of future. The main role of managers is to record their
financial transactions in more effective manner so that goodwill of the company can be attain in
more quick time (Wickramasinghe and Alawattage, 2012).
The project report provide various information about different types of accounting
systems and reporting that are helpful in recording of the data in more reliable manner. Further,
this report would use various costing methods that are effectively responsible for evaluating net
profit of Tech Imda ltd. Merits and demerits of planning tools for controlling budgets are explain
under this. Examination of certain types of financial issues and their effective measures to
overcome those issues is discussed under this project.
TASK 1
P1: Various types of management accounting system and their importance
In accordance to increase profitability, it is necessary to make use of effective accounting
tools that are responsible for garneting more valuable results to the company. In every business
whether small or large they need to collect, summarise and evaluate financial transactions
through using effective accounting systems. Administration is always in research for all those
matters which are necessary for increasing productivity of Imda tech Ltd. It is necessary
operation of management to make use of appropriate accounting information for the purpose of
making effective decision making near future.
The management need to make proper planning, organising and communicating every
department works to analyse whether they are operating in right manner for the growth of the
company. While accounting is said to be a systematic recording of financial data that is being use
for the purpose of analysing future profitability of the company. Management accounting is one
of the most important aspects as a profession which include manager for partnering in effective
company to make future decision making. This is an effective technique of business performance
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analyses in order to prepare internal accounting statements (Lavia López and Hiebl, 2014). This
will assists accountant to take crucial decisions according to their set aims and objectives.
Basis Management accounting Financial accounting
Concept According to these specific
accounting systems which is being
provided as crucial information to
the managers to make vital plans for
their upcoming projects.
Under these accounting systems, it
will be assessing entire focus on
formulation of organisation
strategies to various interested
parties.
Essential It is not essential for the department
to make entries of all data for the
company.
It more significantly need to be
followed by managers before
making any financial reports.
Purpose The primary objective is to make
proper planning and to make vital
decision by delivering effective
detail information to the department.
Under this accountant need to
prepare financial data for presenting
it in front of various stakeholders.
Format There is no need to make any
particular format for recording of
transactions.
It is utmost important for every
business enterprises to prepare
financial transactions in more
specific format.
Importance of using management accounting information:
ABC costing: It seems to an effective accounting method which is used to determine
activities that a company perform and allot indirect cost to a products. It would assign production
overhead costs to produce in more specific manner than the traditional method of allocating
costs.
Relevant costing analysis: Such kind of cost evaluation is related with management
decision and make alteration as per the future outcomes. This analysis is most important to
reduce the implication those are affecting the profitability of an organisation.
Evaluation of useful information: It is another importnat aspects for every managers to
provide data that is being use to develop appropriate strategies in order to make vital decision in
near future time.
Different types of accounting systems:
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There are several accounting systems that can be helpful for an organisation to evaluate
their regular financial transactions that are done during the period of time. Few of them are
elaborated underneath:
Cost accounting system: This happens to be utmost important tools through which
company can more easily locate and determine their actual costs that are incur over the
production of products and services. These are directly or indirectly make impacts of
manufacturing process.
Actual costing Standard costing Normal costing
In this cost of job is being
evaluated by using actual
direct material and applied
overhead.
Under this, job cost is analyse
by using budgeted direct and
standard cost at the time of
production process.
The actual price are used for
analysing for direct lobar and
direct material for future
estimations.
Inventory management system: According to the account officers, it is essential for the
company to keep regular record of their stock by using appropriate accounting systems. This
assists in determining total flow of stock within a set duration of time. Through effective use of
such system overall bills, detail record of invoices and inventory related transactions are analyse
accordingly.
There are various types of stock valuation techniques which are needed to be followed
during the period of time. Some of them are mentioned underneath:
 FIFO: In most of the organisation, the actual flow of materials need to follow this
particular method which make use of this accounting as logical selection. There are no
any GAAP restrictions on the use of FIFO at the of reporting financial outcomes.
 LIFO: There are certain businesses, whether the earlier products are kept in inventory.
While new items are sell out first. The IRS allows the use of LIFO, but to use it as any
subsidiary.
 AVCO: It is applied differently in periodic inventory system and uses as perpectual
techniques is an organisation. These are more similar as average cost method that use to
analyse total value of ending stock and cost of sales.
Job costing system: It refers to be primary aspects of management which is used to
measure total assign products costs to single products instead of group of products. Basically,
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such types of accounting system would always provide information about produced products
which is relatively different from each other (Christ, 2014). Some of them are:
Batch costing: It is an effective form of particular order costing. In this each batch are
marked as number of identical units but every batch will be separate from one another.
Contract costing: It is use to track flow of cost those are asscoaited with a particular
conract with an individual. Like for example a company bids for a wide contruction projects
related to prospective customers.
Process costing: It is mostly use as significant aspects for project management. It is an
essential techniques of allotting costs to units of production in various companies.
Service costing: It is a ncessary metod of operation costing that is used in an organisation
that provide services in accordance of producing products during the time.
P2: (1): Different types of management reporting system
It is the primary motive of every profit generating business is to make use of best
suitable reporting system that can provide them more reliable and healthy outcomes in very less
time period. This would be primary responsibility of managers to look for effective system for
the future development and to control extra costs of TECH UKLtd. They need to record every
financial data that are being incurred during the time and which has been collected from various
department of an organization (Moser, 2012).
By doing so, all these reports are being presented in front of all investors and external
stakeholders those are held liable to make analyses of current financial position of the company.
On that basis, a valuable decision would be made so that further capital investment decisions will
be made in advance by the investors. The data would be recorded by collecting information from
various department or sources. The primary sources of data collection would be taken from
internal department. Some crucial information would be collected from financial or non financial
modes.
There are various types of accounting reporting system which are effectively useful the
company. Some of them are discuss underneath:
Schedule report: It is an important activities that lets company's data from one or more
dashboards on regular or recurring basis. It is more systematic manner of reporting data. It is a
typical report that consists of all assessment of data in order to attain long term aims and
objectives.
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Exception report: It is a list of abnormal products or items that included outside of
particular range. This kind of reports are strictly prohibited without permission from the owners.
Demand report: It is a kind of report that is not pre planned, but formulated on the
requirement of interested parties. This seems that demand for course at the concluding of the
scheduler are pre-recorded under this report.
Performance report: It is one of the most essential report that are use for the purpose of
making comparison among actual outcomes with the standard one. In order to do so, managers
need to be making use of past data and make evaluation with present one. This will determine
real position of the company. All those issues that are arises in an organisation can be resolve
before making posting of the data into this statements.
Inventory management report: This kind of accounting reports consists of all vital
information about inventory position of the company. Such as opening and closing record of
stock that a company has kept in their warehouse are posted as per their data of occurrence. As it
has been observed that inventory is primary part of any manufacturing business that leads to
increase of overall growth and efficiency at the same point of time. There are various techniques
are being used by the accountant to record detail information about stocks such as inventory
turnover ratios, ABC costing and LIFO and FIFO method.
Account receivable report: According to this particular report every information which
is related with total lists of unpaid customers those are due for payment are determine under this
report. Through using this reporting system, a company can easily be able to analyse exact
timing of amount recovery which are being overdue for the payment.
Job cost report: Such kind of reports assist for evaluating vital records of product
manufacturing related information’s. This will be used to identify overall costs which they are
going to incur for producing one unit of products of group of products. Through this company
can easily be able to analyse their every day job costs and operations expenses.
Operational budget report: As per this report, every data regarding their total costs and
expenses that are invested during the manufacturing of goods are recorded properly. Such kind
of reports would be summarised by collected information about sales, production purchase, raw
material consumed and allocation of resources during that time (Hilton and Platt, 2013).
II): Importance of reporting methods
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As per the above mentioned significant reports, it has been seen that organisation
required to record all essential financial data in their respective statements. Through preformance
report, managers would be able to analyse overall performance by comparising actual data with
the past one. Whereas accounting receivable report should lead to determine exact time to gather
overdue payments from various persons. Inventory management reprort would be liable to
manage and control overall stock positions kept by the company.
M1: Benefits of using management accounting system
It has been seen that wide organisation are mainly using more reliable systems that can
assists in summating data as per their data of transactions. By doing this, chances of mistakes
would be minimise up to a extent. There are various crucial advantages of using those above
mentioned accounting systems. By the use of cost accounting systems, total flow of cash in the
business can easily be analysed. Whereas with having inventory management tools managers can
easily be able to record and maintain balance in their stock level. All of them are held
responsible for increase overall productivity of the company.
D1: Critical evaluation of accounting reporting systems
As per the above mentioned various types of accounting reports, it has been examine that
all of them are held responsible for generating maximum return for the company. If managers
use to record financial information in accurate and reliable manner they are in very less period of
time can attain their set aims and objectives. In respect to this, performance report would be
analysing in more effectively so that exact detail information about company’s financial position
would easily be determine. Whereas by the use of account receivable report company can
identify exact time and date of total overdue payments. It has been analyse that managers do
have two options such as accounting system which is liable to evalaute financial information
during the time. While reportingis basic system that is held responsible for recording of all
financial data in theri respective format. This seems to be more favourble techniques for the
company.
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TASK 2
P3: Various types of costing methods which are use for calculating net profit
In every business, costs play an eminent role during production of products and services.
It is an essential part of an organisation to make use to their total costs in right manner so that it
would not increase extra expense for the company. This is necessary for managers to make use
of microeconomic factors in their daily business to generate more reliable outcomes. This is an
effective part which would assist in determining whether resources of the company are utilised in
proper manner. This will help entire operational department to make desirable and economic
reputation within an organisation. In respect to get more effective outcomes within a definite set
of time the company may require to control their unnecessary cost and expenses those are incur
in their regular cost of productions (Becker, Ulrich and Staffel, 2011).
Cost is said to be amount of value charged in respect to get something. These are directly
or indirectly related with production of goods and services. This will enhance maximum burden
over employees to give their best efforts to increase profitability for the company in very least
time. It has been observed that without having proper flow of funds management cannot be able
to take valuable decision for their upcoming projects. The will make huge impacts on their desire
aims and objectives. There are various costing methods which could effectively utilised by
TECH Ltd in their business to determine total net profitability of the company. Few of them are
discuss below:
Cost volume profit (CVP): It is an essential techniques which is being use to measure
various modification in respect to total cost and volume that can affect companies overall
operating earnings as well as net flexible aspects.
Flexible budgeting: This is said to be an adjusted techniques which alter in more reliable
manner and make use as static budgets. It can varies with the changes in output those are flexible
in nature.
Cost variance: It is an essential or more simple for making comparison between actual
cost value and their budgeted amount. This would assist to make analysis of all those changes
those are incur during production process.
Marginal costing: It is known as those costing techniques which is use for production of
one additional unit. These are mainly conclude variable costs not fixed because of this nature, it
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is said be period costing method. Most of the investors use to take these techniques more reliable
for making valuable decision for their business projects.
Absorption costing: It refers to be utmost important costing techniques which are
applicable to all production related cost (Absorption costing, 2018). These costs use to taken into
account both variable and fixed costs. Because of this nature they are known as full costing
method. Having all reliable criteria but cannot be taken into consideration for valuable decision
making in near future time.
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